NEW DELHI: The National Organisation of Bank Workers (NOBW) has red-flagged to the Election Commission of India (ECI) the propensity of state governments to waive farm loans claiming such steps not only mislead farmers but also damage the banking sector.
In the last three years, various state governments have announced loan waivers amounting to Rs 1.70 lakh crore. Recently, while campaigning in Rajasthan, Congress president Rahul Gandhi promised to waive off farm loans if the Congress comes to power in the State. Karnataka Chief Minister HD Kumaraswamy, too, announced Rs 34,000 crore loan waiver in the state budget.
“We wish to bring to your kind notice that during campaigning, political parties make frequent statements that ‘if their party comes to power, then farmers’ loans would be waived’. You are aware that banks are already facing a huge problem of increasing non-performing assets (NPAs) and in the present scenario, these statements exacerbate the existing problem. Therefore, we request your good self to kindly issue advisory to all the political parties to refrain from making such statements,” the letter sent to the election commission read.
Data from the Union agricultural ministry shows that the Maharashtra government had waived loans worth Rs 30,500 crore in 2017 and the Uttar Pradesh government in the same year had announced
Rs 30,729 crore waiver for small and marginal farmers. Also, `5,630 crore needs to be written off as bad loans for seven lakh farmers in the country.
Wary of impact on credit culture
The Centre is of the view that waivers may impact the credit culture by incentivising the defaulters, even if they are in a position to repay the loan, and thus amplify the moral hazard by discouraging those who repay loans
You are aware that banks are already facing huge problem of increasing NPAs and in the present scenario, these statements by political party leaders exacerbate the existing problem. Therefore, we request your good self to kindly issue advisory to all the political parties to refrain from making such statements
--NOBW letter to EC